Dear hashnoders,
I'm asking for pieces of advice. You see, for several years I developed an open source software that is now used by hundreds of companies/universities around the world. It was kind of a side thing from my job, but it has now grown a lot! And feature requests are raining.
The time has come where I want to create a small (individual) company (easy to do in my country), so that I can sell "pro support" or "managed solution" (where I host the service instead of asking users to install it on their servers). I'll keep my full time, non dev job too. It'll be a secondary activity.
I would love to get feedback if some of you already know about a similar adventure.
And the big question is: Is it reasonable to ask something like 3k € per year for some custom development on the software and pro support? I already have a "customer" with funding from a grant dedicated to such thing. Would it be better to make a quote for individual features instead of some sort of flat rate/year?
Any comment is welcome :)
If it's relevant, the software can be seen as some sort of specialized CMS. Think Wordpress, but without the bad code part :p
Cheers, J.
Sébastien Portebois
Software architect at Ubisoft
The answer in short is obviously yes.
250€ a month can be seen as price but only if you don't take the custom build into account. Also actually this should be limited to a certain amount of time / work.
And maybe you could think about a threshold model. But I don't know what you're actually wanting to achieve and this already off topic to me.
You have to see the 250€ as tax deductable because in the end as a company (and I am one) this is a reduction of profit. Hence it's the choice between paying you directly for something where I would have a direct benefit from or paying it to the state, which also holds benefits but ... anyhow.
So yes 250€ for pro support why not. I would even go further and limit this support because for 250€ a month you can barely eat and this model is not linear scalable :)
Hi Janne,
Don't think it's something wrong to ask for, I am looking at doing the same thing and I have no idea where my margin sits for at the moment for the future.
Thing is a lot of companies now are seeing through the automated software and price fees and looking to get low as possible. So for a custom CMS I think it would be right or even more.
A company that I worked for tried building their own CMS.. Less to say failed miserably.. Ended up purchasing for 6 team members to Subscription based Salesforce software.. Easily costing them £10,000 a Year..
£10,000 compared to Starting £3,00 for a Custom build CMS, I think I know what I would use in the long run :)
I'll look into it a bit more and if I find anything i'll send it over to you :) x
There are a few companies out there doing that model, of different sizes (hashicorp, redis labs, wordpress, elastic.co, confluence, etc...). I think it's a good path to take, especially if you already have a robust use base.
Pricing is always the hardest thing because it depends directly on the value that your customers get out of it. If you can, try to find a close competitor and see how much they charge, and start there.
A mentor of mine gave me this advise: If you have customers already asking for support, pick a figure you're comfortable charging (like the 3K you mentioned), double it and start there with one customer. Then, for your next customer, double it again. And repeat until one of your customers pushes back on price. It's incredibly common for developers to undercharge their services, especially to large corporations. If a customer pushes back on the price, you can always offer them a special discount. (note: this only works if you don't publish your prices on your website).
As for what to offer, I would warn against charging a flat fee for building features. I'd develop a standard contract on what support entails (how many hours, how many customer visits, SLA) and negotiate that as a yearly contract. If your customers require a specific feature, I'd negotiate a separate deal.
Discourse has a similar model where the Discourse app is open source, but they provide paid services for their app. I am looking for advice on this topic myself, thanks for asking :)
I highly recommend Adam Jacob’s Open Source Business Models "book" (not really a book, you can read it all online). It’s not very long, but I found it really a good way to step back and think about what’s the model, what to keep open and what to sell, ... and if it could add more weight, I discovered it because it was once quoted/recommended by Mitchell Hashimoto, co-founder of Hashicorp (they also took a little while to find their business model but are now doing pretty well) sfosc.org/business-models
Without more details about the project itself, to see how it fit in the larger landscape, it’s difficult to make recommendations. But the key idea is to identify the competitors and the different kind of users, to try to identify who would be willing to pay for something more, (and from their profile, how much, for which kind of features)
What you describe would fit in the "support" business model, which is indeed very common. The price range though can vary a lot, depending on the clients and product and kind of support. (in other words, without more details, it would be very difficult to give you good feedback)
Hope this helps